The potential for a debt spiral is very real, as any deterioration in the economy causes the HUF to weaken further, creating a negative feedback loop with Swiss Franc loans and further deterioration in non-performing loans. With another peak in gross government re-financing coming next year amounting to about 20% of Hungarian GDP, and the foreign debt burden denominated in HUF worsening, the markets are watching closely.

Interestingly, the Swiss themselves weren't foolish enough to do any of this lending. [!] Austrian banks provided about 40% of CHF loans in the euro-zone. And between 15-25% of the balance sheets of the top four Greek banks are exposed to SE Europe, including almost 40% and 30% of loans to the private sector in Bulgaria and Romania respectively, according to Macquarie Bank. In turn, German, French and other northern European banks are heavily exposed to Greece. No wonder then, that the EU fears the chain reaction which would ensue from a Greek default.

Wheeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee!

I'm beginning to think there are two scenarios:

Everybody gets together and writes off and offsets their debt, one to another, to reduce the mutual plunder via interest payments to a realistic level

A cascade failure ripples through the system and everyone's FIRE sector goes bye-bye

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

"There is nothing we can do to stop foreign exchange borrowing, and we don't even try. As members of the European Union, we have to respect the free flow of capital," he [Hamezc Istvan, director of Hungary's Central Bank] said.

In the interim, an IMF intervention and a rescue of the Central-Eastern European economies by encouraging Western Banks to not bail themselves out of their Central-Eastern European investments, going by the name of "the Vienna Initiative" has been in place since 2009.

We're going to have another round of currency crises in the same countries we have already had to rescue?

You're going to have countries going further into recession, making it harder for them to service their debt, that will be seen and responded to as a currency crisis.

So you're saying another three iterations of Teh Stupid: One to realise that it's a currency crisis (European Tribune: Get your news two years early), but deal with it by the IMF playbook. Another one to realise that maybe it's time to dust off the proper policy response (John Maynard Keynes: Get your policy response eighty years early). And a third one to actually get their act together and convince even the dumbest Bild Zeitung reading meatbrain that Keynes was right all along.